Thailand investment TS Viet Nam Limited Company, which creates jobs to 200 local workers is making profit from their production of motorbike parts in Ha Noi. — VNA/VNS Photo Danh Lam

HA NOI  (Biz Hub) — By being net buyers in October with a net value of VND1.2 trillion (US$56.6 million), foreign investors had created a positive momentum in the market, and domestic investors expected they would be more active, analysts have said.

The figure in October alone was two times higher than that during the first nine months of this year.

Tan Viet Securities Co's chief analyst Le Dac An said the net purchase of foreign investors was the boost for the market in declining sessions, as it showed that foreign investors were optimistic about Viet Nam's economic prospects.

Following the surge, domestic investors were more confident in buying mid-cap and penny stocks.

In fact, foreign investors sold their shares for most of the third quarter on fears of reducing QE3 along with a trend to divest from frontier and emerging markets, including Viet Nam.

But as the US maintained its stimulus package, funds flew back to the Vietnamese market to seek profits.

However, An noted as foreign capital poured into stocks, mainly coming from exchange-traded funds (ETFs), they were unstable.

"The funds are taking advantage of the US quantitative easing policies (QE3), and they can withdraw just like what happened in June," he told the Dau tu chung khoan (Securities Investment) publication.

More optimistically, BIDV Securities Co's Tran Thang Long stated while ETFs had often accounted for 50-80 per cent of foreign net buying value, they made up for only 30 per cent in October. "That is a positive signal," he commented.

According to Vietcombank Securities Co analysts, although foreign investment might not be as strong as in the first five months of this year, it would continue to help the domestic market.

In addition, historical transactions showed that foreign investors mostly bought shares in December and the first quarter of the next year.

Currently, Viet Nam's average price to earnings ratio is around 12.5 times, among the lowest in Asia.

Meanwhile, economic indicators in October improved, and bad debt handling policies were going in the right direction, enhancing the confidence of foreign investors in the domestic market. — VNS